Weeks into a national conversation over the possibility of taxing the wealthiest Americans at far higher rates in order to correct severe income inequality in the U.S., Sen. Elizabeth Warren (D-Mass.) made clear that the issue will be addressed in the 2020 presidential election, unveiling a plan to tax assets over $50 million.
Two economists who are advising Warren, Emmanuel Saez and Gabriel Zucman of University of California at Berkeley, announced to the Washington Post that the senator is proposing an annual tax of two percent for assets over $50 million, as well as a three percent tax for assets above $1 billion. The proposal, the economists estimate, would raise $2.75 trillion over 10 years and would affect just .1 percent of American households--raising the percentage at which their wealth is taxed to just 4.3 percent from 3.2 percent.
"It's wonderful to see Democrats coloring outside the lines and taking addressing the immorality of our economy seriously." --Krystal Ball, The Hill
The "Ultra-Millionaire Tax" would apply to "all household assets...including residences, closely held businesses, assets held in trust, retirement assets, assets held by minor children, and personal property with a value of $50,000 or more," according to a paper by the economists.
Warren's proposal, which economist Thomas Piketty recommended in his book "Capital in the Twenty-First Century," comes weeks after Rep. Alexandria Ocasio-Cortez (D-N.Y.) first told the press about her plan to tax income over $10 million at 70 percent--a proposal supported by a majority of Americans, including 45 percent of Republicans, according to a poll by The Hill.
As journalist David Dayen explained at The Intercept and on Twitter, Warren's plan would raise more than Ocasio-Cortez's proposal, which the Post estimates would create $720 billion in tax revenue over a decade.
Some suggested that Warren's plan represents a clear shift away from Democrats' fear of pushing to raise taxes, as progressives like Ocasio-Cortez force their colleagues to pay more serious attention to nation's crisis of economic inequality. If embraced by the party, such a proposal would certainly be an alternative to the Republican Party, which passed a $1.5 trillion tax cut for corporations and the wealthiest Americans in 2017, falsely claiming that working families would benefit from pay raises which never materialized.
Saez told the Post that Warren's is rooted in the fact that "inequality has been increasing so much, particularly in wealth, and the feeling our current tax system doesn't do a very good job taxing the very richest people."
Speaking with The Intercept, Piketty said that while the U.S. once "led the world toward the development of progressive taxation and reduction of inequality" in the last century, he is confident that Warren's proposal on taxing wealth "will not only help curb inequality and ultimately promote growth in the U.S., but also have a major impact all around the world."
